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fibs are just another illusion.
along with elliott wave, gan and other esoteric methods.
as a matter of fact about 99% of all that's available
out there is no good. sorry to say that but that's
the truth. but ta works in other 1% of the cases.
without much elaboration... price expectation
can on certain occasions turn into real price
( sell fulfilling prophecy ) if majority of traders
have the same price expectation.
in this case it's coincidental...
sometimes it's 50% retracement sometimes
it's 40% and fib guys come out from under the
carpet saying it's fib retracement.
to prove that fib works, you need to backtest it
and if it works in more than 50% all cases for
retracement with certain accuracy ( say +- 2% )
then call me and we can be in business together.
concept of price expectation:
price expectation = f(sum of all price expectations
of all market participants), simplified.
price expectation is basically price prediction,
or sometimes called price objective.
example:
current price is 80,
dominant price expectation is 50.
then price has a good chance of going to 50,
since dominating crowd will make it go there thru supply
and demand.
if expectation changes on the way, then it's a new picture...
bottom line is it's all mostly coincidental with low probability.
expectations change minute after minute, hour after hour,
day after day.
so fibs are just coincidental, like most things in trading.
if all of a sudden most of us have and expectation that dow
will go to 12000, it will. same about fib levels.
that's how it works.
finding dominant expectation with more than 50% probability
in a certain time frame at a current time is what needs to be done.
nn work is just about that, knowingly or unknowingly...
more to it than that...
bilo.
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